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 Is Bitcoin useless?

Bitcoin celebrated its 12th anniversary by Satoshi Nakamoto in response to an attempt to find a solution to the global financial crisis.

bitcoin useless

By decentralizing the financial ecosystem, Nakamoto has been trying to shift the balance of power from a select group of financial institutions to the broader public.

Understanding Bitcoin:

2018 and 2019 were particularly tumultuous years for the entire cryptocurrency industry.

At the beginning of 2018, Bitcoin was trading as high as $18,336 but had fallen to $3,400 by June 2019, a loss of about three-quarters of its value.

During this period, Bitcoin has fallen by almost 73%.

But the price of Bitcoin is regaining ground once again, and investors are starting to jump onto its bandwagon.

Bitcoin has been applauded and adopted by Twitter CEO Jack Dorsey, global investor Paul Tudor Jones, hedge financier Stanley Druckenmiller, investor Bill Miller, Ark fund manager Katie Wood, and many more…

It is worth noting that the payments platform PayPal announced the acceptance of Bitcoin and its integration into its payment, buying, and selling services.

In April 2021, the price of Bitcoin crossed $60,000, buoyed by Tesla's investment of $1.5 billion in early January.

Despite the massive adoption of Bitcoin, the following question still arises in many discussions:

Will Bitcoin become mainstream as a store of value or as a medium for everyday transactions?

In a 2018 editorial, The Economist declared Bitcoin and other cryptocurrencies useless.

There is no reasonable way to arrive at any particular assessment, the publication wrote, citing several flaws in the ecosystem.

This includes a lack of transparency and security in private blockchains and difficulties in purchasing or dealing with cryptocurrencies.

While the Wall Street Journal assessed the rise of bitcoin in a similar vein, some investors see bitcoin as a bubble ready to burst at any moment.

Investor Mark Cuban likened bitcoin to gambling and suggested that investors in the cryptocurrency should prepare for a crash because the price is so volatile.

Is bitcoin useless?

Bitcoin's identity crisis is largely to blame for its volatility.

Bitcoin was originally conceived as an international currency and as a mechanism for daily transactions that could seamlessly across national borders.

However, things did not turn out that way.

Over the years, various reports have documented bitcoin's use for money laundering and illegal activities, even though its unpopular face has ensured that consumer adoption remains minimal.

The flip side of this story was the entry of speculative retail investors who pushed its price up to unsustainable levels.

Rising valuations in the cryptocurrency markets have changed the dominant narrative surrounding Bitcoin.

Bitcoin is no longer considered a medium for everyday transactions.

Instead, the cryptocurrency has come to be classified as a store of value, and many analysts see it as an alternative investment similar to gold.

But cryptocurrency faces two important problems here as well.

Challenges Facing Bitcoin:

The first challenge relates to bubbles in the bitcoin price.

There have been many Bitcoin bubbles that have burst, and it remains to be seen whether the current high prices will survive.

Previous bitcoin bubbles occurred in 2011, 2013, and 2017.

During each of these cases, the price followed a parabolic curve, with the bitcoin price experiencing a sharp valuation increase that was immediately followed by a similar sharp decline.

During each of these bubbles, the value of Bitcoin rose by three digits and attracted significant retail capital.

The volumes of liquidity played a major role in boosting the bitcoin price in these bubbles.

The second problem has to do with Bitcoin meeting some of the basic characteristics of being a store of value.

Morningstar analyst Kristoffer Inton and his team created a framework to check whether cryptocurrencies can replace gold as an investment vehicle.

Focus on liquidity, functionality, supply scarcity, assured future demand, and sustainability.

Except for the scarcity of supply, bitcoin fails in other attributes.

Not surprisingly, analysts concluded that cryptocurrencies do not and will not challenge gold as a safe asset class.

Bitcoin future:

Bitcoin enthusiasts point to developments in recent years in its ecosystem as evidence that the virtual currency has staying power, and is here to stay.

Various technological developments mean that cryptocurrency can be used in retail transactions in the future.

The number of Lightning Network nodes within the Bitcoin network continues to double.

The Bitcoin ecosystem also continues to grow, including its support for a range of products that expand the range of its use cases.

In addition to trading with Bitcoin, Bitcoin can also be used as collateral for loans or to purchase jewelry.

According to some reports, small and medium-sized businesses have also started using the Bitcoin blockchain to make bank transfers because it is less expensive.

But the biggest change in bitcoin's fortunes could come from regulation.

Even with the SEC's rejection of bitcoin exchange-traded funds (ETFs) making headlines, it now appears that there is a clear softening of the regulator's stance.

The coronavirus pandemic has raised fears of rising inflation as the US economy recovers with the help of vaccines and financial aid packages.

This is expected to further boost Bitcoin.

However, it is also possible for governments to crack down on bitcoin if central banks testing digital currencies lose interest in it. 

Stocks and exchanges on this topic from cash to regarding the state of some cryptocurrencies.

While the SEC has cracked down on cases of crypto fraud and manipulation, commissioners in its ecosystem have also been encouraged to clean up and clarify their actions.

The result is the emergence of an ecosystem.

Regulatory Establishment Regulatory Currency Exchange.

The entry of insurance giants such as Lloyds of London into the cryptocurrency ecosystem is another development that should ease the concerns of investors, who are wary of investing in cryptocurrencies.

While institutional investors were initially cautious, they have warmed up to the idea of ​​investing in bitcoin now.

Where they are arranged into the cryptocurrency ecosystem.

Unlike short-term investors and traders, long-term investors, long-term investors, are long-term investors.

A look at the current state of Bitcoin in 2021

What does the SEC say about bitcoin?

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